Home Renovation Contracts

By
Real Estate Sales Representative with Right At Home Realty Inc.

One of the major reasons for disputes over renovation work is the lack of a contract. The best way to avoid this is to draw up an agreement describing the work to be done and what it will cost to do. This contract documents the agreement between the parties and becomes a legal document, binding both parties once they have agreed to its terms and signed it.

To help your renovations go smoothly, Canada Mortgage and Housing Corporation has created the following tips to help you along with this process:

* Don't sign anything until you are fully satisfied it describes exactly what you want and contains all of the terms that you have agreed upon. If you are not sure of something in the contract, ask for an explanation. You may also wish to seek legal advice on the contract before signing.

* Both you and the renovator should sign two copies of the contract, and you should retain one original signed copy for your records.

* While some contractors may offer a discount for payment in cash with no written contract, don't be tempted.

"Underground economy" transactions are risky, and the pitfalls can easily offset any promised savings.

 

* The following are some of the elements that should be included in most renovation contracts:

o the correct and complete address of the property where the work will be done

o your name and address o the renovator's proper legal name, address and telephone number

o a detailed description of the project, plus any sketches and a list of materials to be used

o the type of work that will be subcontracted o the right to retain a construction lien holdback as specified under provincial law

o a clause stating that work will conform to the requirements of all applicable codes

o start and completion dates

o agreement about who is responsible for obtaining all necessary permits, licenses, and certificates - the homeowner or the renovator

o responsibility of the renovator for removing all debris as soon as construction is completed

o a statement of all warranties, explaining exactly what is covered and for how long

o a statement of the renovator's public liability and property damage insurance

o price and terms of payment o details as to how the contract may be terminated, including all financial implications o the process for making changes

 

* No matter how well you plan your project, changes may be necessary. These can result in increased costs and delays if not dealt with properly in the contract. To protect yourself and the renovator, the contract should specify how changes may be made, and how the financial consequences arising from changes will be dealt with. The contract should also specify that changes may only be made through a written change order. Do not accept verbal assurances.

 

SOURCE: CANADA MORTGAGE AND HOUSING CORPORATION (CMHC)

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